What: Forbes reviews Galeria’s third insolvency in three years.

Why it is important: Central seems more interested to acquire the rest of Signa’s crumbling empire than Galeria. Is that only due to the non-luxury positioning of the company?

Galeria Karstadt Kaufhof, a prominent German department store chain with 15,000 employees, has filed for insolvency for the third time in four years. This follows the debt-fueled collapse of its parent company, Signa, which also owns Selfridges and several landmark properties. The latest insolvency filing at the Essen district court is seen as an effort by Galeria to break free from Signa's influence, which has been criticized for its high rents and restrictive ownership structure.

Previously, during its insolvency in February 2023, Signa Holding had pledged $219 million in new capital to Galeria in exchange for debt write-downs, which included $645 million from German taxpayers. However, the financial difficulties of Signa, particularly after its insolvency in late 2022, cast doubt on this support. Galeria's struggles were exacerbated by the pandemic, inflation, and energy cost hikes due to the Russia/Ukraine war.

Galeria’s CEO, Olivier van den Bossche, views the current development as a liberation from Signa’s high costs and restrictive management. The company has faced scrutiny and public criticism for its reliance on state subsidies and rent practices.

Signa acquired Galeria in 2019 and merged it with Karstadt in 2020, forming Europe’s second-largest department store chain. Since then, Galeria has closed underperforming stores and reduced staff, with plans to cut around 52 locations by the end of the month. The company has already begun discussions with potential investors, as stated by Galeria’s interim administrator Stefan Denkhaus.

Galeria Kardstadt Kaufhoh files for a third insolvency in 3 years